Executive Summary:
The PJM 2028/29 Base Residual Auction (BRA) results were released on July 14, 2026, marking another elevated cycle for the region’s capacity markets. For the second consecutive year, the auction failed to procure sufficient resources to meet PJM’s reliability requirement, leaving a shortfall of 6,821 MW. Capacity prices cleared at $325/MW-day, hitting the FERC-approved cap, and representing a modest decrease (~2.5%) from last year’s record high of $333.44/MW-day. These results are a continuation of the system-wide trend of demand outpacing new generation additions. For renewable and storage developers, the message is clear that PJM needs new capacity. Assets that can qualify and perform will be well-positioned to capture elevated revenue for years to come.
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PJM 2028/2029 BRA Results
PJM’s 2028/29 Base Residual Auction secured 138,318 MW of unforced capacity from generation resources and demand response to service projected power needs across its region of 13 states and the District of Columbia. When Fixed Resource Requirement (FRR) resources are included, the total committed UCAP rises to 149,182 MW.
Despite the volume of capacity procured in the auction, it fell 6,831 MW short of PJM’s reliability requirement, resulting in insufficient capacity to meet PJM’s one-loss-of-load-event (LOLE) in the 10-year reliability standard. PJM’s reserve margin stands at 14.7%, approximately 5 percentage points below the reserve margin target needed to meet the standard for this auction cycle.
Prices cleared at the FERC cap of $325/MW-day across the system’s footprint, a cap that was established in coordination with PJM’s 13 state governors and FERC as part of a price collar framework designed to protect consumers from extreme market volatility. This was the third consecutive auction to hit the price cap.
Most notably, only 525 MW of new generation and upgrades were cleared in this auction. Despite two years of record-breaking capacity prices, the supply response from new market participants remains insignificant. The overwhelming share of capacity revenues continues to flow to existing generators rather than financing new infrastructure that the system desperately needs.
Why The Shortfall Is Getting Worse
To understand why PJM’s capacity market continues to fall short of procuring needed capacity, one must examine the structural forces at work on both sides of the supply-demand equation.
- Data Center Load Growth: The single most driving factor of demand growth in PJM is the rapid expansion of energy-intensive data centers. The 2028/29 BRA saw this trend continue with data center additions representing the primary source of incremental peak load growth. The forecasted peak load for the 2028/29 delivery year is approximately 2,000 MW higher than the forecast used in the last auction cycle. Data center demand can interconnect faster than generation and transmission infrastructure needed to support it, creating the asymmetry that is the center of PJM’s current challenges.
- New Supply Not Keeping Pace: Under normal market conditions, sustained elevated prices should attract meaningful additions of new supply. That response, however, has been slow to materialize. The 2028/29 BRA cleared a small amount of new generation, representing less than 10% of the 6,831 MW reliability shortfall. This PJM interconnection queue contains hundreds of projects seeking market participation; however, the bottleneck is the process itself.
- Compressed Auction Timelines: Historically, PJM’s capacity auctions were conducted three years in advance, giving developers time to plan and build new resources in response to market prices. A series of regulatory delays compressed that timeline, reducing the forward planning window to less than a year in some recent cycles. PJM is actively working to return to the three-year-forward auction cycle.
The chart below demonstrates cleared megawatts by new generation/upgrades:
Turn Record PJM Capacity Prices into Bankable Revenue
SYSO helps renewable and storage assets navigate PJM’s capacity rules, optimize accreditation and performance, and stack revenues across capacity, energy, and ancillary services with 24/7 market operations support.
PJM Response
PJM has instituted a series of targeting initiatives to accelerate the development and interconnection of new generation, including:
- Reliability Backstop Procurement: The most immediate response is PJM’s plan to seek FERC approval for a special Reliability Backstop Procurement (RBP) in September 2026. The Backstop Procurement is designed to address the near-term supply shortfall by securing additional capacity outside of the standard BRA process. This should create an additional entry point for qualified resources that can demonstrate readiness to perform.
- Connect and Manage: PJM is developing a Connect and Manage (CAM) framework aimed at large loads (data centers), permitting them to connect to the system under a flexible operating protocol. Large loads under this framework would be required to curtail consumption during periods of system stress.
- Expedited Interconnection Track: PJM has established a temporary Expedited Interconnection Track (EIT) designed to accelerate the path to market participation for up to 10 state-sponsored, shovel-ready projects each year. Eligible projects must demonstrate readiness to come online quickly, making this track particularly relevant for storage assets in advanced project stages.
- Bilateral Contracting: In June 2026, PJM began facilitating new long-term bilateral agreements between large loads and generation providers. These Bring Your Own New Capacity (BYONC) contracts allow large loads to secure supply directly from new generation, storage, or demand-side resources. PJM issued a Request for Proposal to support this matching process, while market participants retain the ability to pursue bilateral agreements independently.
- Interconnection Queue Reform: PJM is actively working to clear its interconnection queue backlog through a new streamlined process, leveraging artificial intelligence in reducing study timelines.
Furthermore, PJM has published its Power Reliability Through Market Design report, which outlines a long-term vision for structural system changes to the capacity market aimed at better aligning price signals, interconnection processes, and reliability outcomes.
What This Means for BESS and Renewable Developers
Two consecutive auctions missing PJM’s reliability requirement is a structural signal for BESS and renewable energy developers. With prices hitting the FERC-approved cap in three consecutive auctions and the shortfall widening from 6,500 MW in 2027/28 to 6,800 MW in 2028/29, there is no basis for expecting a price reversal in the near term. Developers underwriting new projects in PJM should plan around capacity markets that offer strong, durable revenue potential.
For BESS developers specifically, the current environment offers additional advantages. Storage assets can reach commercial operation faster than new thermal generation, qualify for PJM capacity accreditation, and stack revenues across multiple markets. With only 525 MW of new generation clearing in this cycle, developers who successfully navigate the interconnection process and reach commercial operation ahead of the curve will face limited direct competition for capacity revenues. PJM’s planned Backstop Procurement filing in September 2026 adds an additional market entry point for assets that can demonstrate readiness to perform in the current cycle.
How SYSO Helps Assets Capitalize
Translating PJM’s elevated capacity prices into bankable revenue requires careful planning and execution. Capacity accreditation, performance compliance, qualification timelines, and ongoing dispatch optimization are complex, interrelated disciplines. The cost of getting them wrong is measured in forfeited revenue and performance penalties. SYSO works with developers and asset owners across PJM to provide end-to-end market participation support, combining deep capacity market expertise with 24/7 monitoring from a NERC-CIP compliant operation center, real-time telemetry, and advanced analytics. For developers prepared to act now, PJM’s current market conditions represent a durable, multi-year opportunity. Contact our team today to learn how SYSO can help your assets capture this opportunity.